BILL ANALYSIS


                                                    C.S.S.B. 1236
                                                   By: Armbrister
                                                    State Affairs
                                                         03-30-95
                                   Committee Report (Substituted)
BACKGROUND

Current law governs certain relationships between beer
manufacturers and beer distributors by requiring manufacturers to
designate territories in this state where distributors may
distribute and sell brands produced by beer manufacturers. The law
currently stipulates that beer manufacturers may enter into
agreements with distributors which provide for exclusive
territorial assignments, a common practice in the U.S. following
the Supreme Court's ruling relative to exclusive territories in
Continental T.V., Inc. vs GTE Sylvania, 433, U.S. 36 (1977).

PURPOSE

As proposed, C.S.S.B. 1236 provides for the sale of beer within
assigned territories.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 102.51(b), Alcoholic Beverage Code, to
prohibit a manufacturer from assigning all or a part of the same
sales territory to more than one distributor.

SECTION 2. Amends Chapter 102C, Alcoholic Beverage Code, by adding
Sections 102.54 and 102.55, as follows:

     Sec. 102.54. ADDITIONAL REQUIREMENTS FOR APPLICANTS FOR
     DISTRIBUTOR'S LICENSE. (a) Sets forth provisions the Texas
     Alcoholic Beverage Commission or administrator (commission)
     shall require an applicant for the license or a holder of the
     license to show, in addition to any other requirements
     necessary for the issuance or renewal of a distributor's
     license.
     
     (b) Sets forth provisions the commission or administrator
       may require the applicant or holder to show, in determining
       whether an applicant for or holder of a distributor's
       license meets the requirement of Subsection (a)(5).
       
       (c) Requires the commission or administrator to refuse to
       approve an application for a distributor's license or to
       refuse to renew a distributor's license if the commission or
       administrator finds the holder or applicant has failed to
       comply with any of the requirements of Subsection (a) or
       (b).
       
       (d) Defines "distributor," "manufacturer," and "retailer."
       
       Sec. 102.55. TERRITORIAL ASSIGNMENTS; DEFINITIONS. (a) Defines
     "brand" and "brand extension" as the terms relate to an
     agreement between a manufacturer and a distributor describing
     the sales territory in which a distributor may sell the beer
     of the manufacturer.
     
     (b) Provides that a brand extension is not a new or
       different brand.
       
       (c) Requires a manufacturer to assign a brand extension to
       the distributor to whom the brand was originally assigned,
       if the distributor to whom the brand was originally
       assigned, if the distributor elects to distribute a sell the
       brand extension.
     SECTION 3.     (a) Provides that a territorial agreement in effect on
March 22, 1995, between a manufacturer and a distributor in which
a manufacturer has not assigned all or part of a territory to more
than one distributor is considered to be an enforceable agreement
requiring a manufacturer to not assign any part of the assigned
territory to more than one distributor.

     (b) Provides that a territorial agreement in effect on March
     22, 1995, in which a manufacturer has previously assigned all
     or part of the same sales territory to more than one
     distributor is not affected by the amendment to Section
     102.51, Alcoholic Beverage Code, enacted by Section 1 of this
     Act. Provides that a territorial agreement in effect on March
     22, 1995, in which a manufacturer has previously assigned all
     or part of the same sales territory to more than one
     distributor is governed by Section 102.51, Alcoholic Beverage
     Code.
     
     SECTION 4.     Emergency clause.
           Effective date: upon passage.